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TMI Blog2006 (11) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... LVEER BHANDARI JJ. C.A. Sundaram Senior Advocates[Ms. Momta Oniom (for M/s. Corporate Law Group), Advocate, with him] for the respondents. G.E. Vahanvati, Solicitor-General of India (A. Saraf, Vijay Hansaria Senior Advocates, P.I. Jose, Hrishikesh Baruah and Debashish Advocates with them) for the appellant. -------------------------------------------------- The judgment of the court was delivered by DALVEER BHANDARI J. This appeal is directed against the judgment dated May 3, 2001 See [2001] 123 STC 234 (Gauhati) passed by the High Court of Assam, Nagaland, Meghalaya, Manipur, Tripura, Mizoram and Arunachal Pradesh, in Writ Appeal No. 36 of 1999. The appellant-Indian Oil Corporation Ltd. is a limited company incorporated under the Companies Act, 1956 and a registered dealer under the Assam General Sales Tax Act, 1993 (hereinafter referred to as "the Act"). The appellant-company has been engaged in the business of sale and supply of petroleum products in the country including the State of Assam. The appellant-company has been purchasing various petroleum products from Bongaigaon Refinery and Petrochemicals Ltd. (hereinafter referred to as "the BRPL") o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subjecting the goods to any other process not amounting to manufacture and the price charged on resale exceeds the sale price by more than such percentage as may be prescribed in respect of such goods or class of goods, the resale by such other person shall, subject to rules if any, framed in this behalf, be deemed to be at the first point of sale within the State." The relevant portion of rule 12 of the Rules reads as under: "Rule 12. (1) Where a person after purchasing goods covered by Schedule II under clause (a) of sub-section (1) of section 8 sells such goods in such manner as mentioned in the Explanation to the aforesaid clause and if the price charged on such resale exceeds forty per centum of the originaal sale or purchase price, in respect of such goods or class of goods, the resale of such goods by such person shall be deemed as first point of sale within the State and the rates of tax shall be as specified in Schedule II for such items" Section 2(34)(d) of the Act defines the "sale price" as under: "2(34) 'Sale price' means (d) in respect of a sale under any other sub-clause of clause (33), the amount received or receivable by a dealer as valuable considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount to be surrendered to Pool A/c. Sale price up to 1.3.94 Amount to be surrendered to Pool A/c. ATF 3,245.38 10,886.71 7,463.56 10,886.71 7,463.56 HSD 2,552.66 6,311.70 3,620.20 5,561.70 3,123.99 MS 4,263.76 15,480.22 10,990.56 14,480.22 10,155.54 FC 1,967.33 5,008.75 2,901.24 5,008.75 2,901.24 SKO 2,287.00 2,212.54 Nil 2,212.54 Nil LPG 3,420.00 5,860.75 680.00 5,156.55 680.00 The appellant-company, for instance, had submitted that on aviation turbine fuel, the appellant paid Rs. 3,245.38 per KL to the BRPL as sale price and collected Rs. 10,886.71 per KL from its customers. However, out of Rs. 10,886.71, the appellant retained only Rs. 3,423.15 per KL as valuable consideration for sale of ATF and the remaining amount of Rs. 7,463.56 was remitted to the "Oil Pool Account". The State had levied sales tax on the entire amount of Rs. 10,886.71 without giving adjustment of Rs. 3,245.38 paid for the same go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected as "surcharge" and had to be deposited with the "Oil Pool Account". Under the administered price mechanism, oil companies were obliged to charge a uniform sales price within the State irrespective of first sale of the taxable goods or resale of tax-paid goods. Any under-recovery or over-recovery on account of the different incidence of tax on sale of taxable/tax-paid goods had to be adjusted through the "Oil Pool Account" by appropriate claim/surrender, respectively. The State Surcharge Scheme for a particular State was formulated by the Oil Co-ordination Committee by considering various taxes leviable in that State. While doing so, any over/under-recovery which arose on account of composite billing, where inter-oil company exemption was not available, was also adjusted to work out the net amount to be charged to the consumers of the State by way of State surcharge. The appellant submitted that during the years 1994-95 to 1997-98, it had paid Rs. 44.16 crores by way of sales tax to the BRPL in respect of the same transactions in question. The Senior Superintendent of Taxes, respondent No. 3, on February 7, 1996, asked the appellant-company about details of the "purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax liability. The learned single Judge vide judgment dated November 2, 1998 See [1999] 112 STC 389 (Gauhati). dismissed the writ petition holding that the amount of "surcharge" collected by the appellant-company even though passed on to the "Oil Pool Account" had to be included in the "sale price" as defined under sub-section (34) of section 2 of the Act. The appellant, aggrieved by the said judgment of the learned single Judge, filed a writ appeal before the division Bench of the High Court. The division Bench, vide judgment dated May 3, 2001 See [2000] 123 STC 234 (Gauhati)., dismissed the writ appeal, inter alia, holding that the "surcharge" collected by the appellant on behalf of the Central Government and contributed to the "Oil Pool Account" was not statutory collection but was collected under the executive instructions and cannot be excluded while calculating the "sale price". It was held that the sale by the appellant-company was to be treated as first sale within the meaning of section 8(1)(a) of the Act read with rule 12 of the Rules since the resale price exceeded 40 per cent of the purchase price. The appellant aggrieved by the impugned judgment has preferred th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es tax to a registered dealer at the time of purchase of sun-dried bricks and the amount of tax then paid should be given credit and balance should be recovered. The learned Solicitor General submitted that on the same analogy, the appellant-company in the instant case should be directed to pay the sales tax on the difference of amount between the purchase price and resale price. This would be in consonance with the Scheme of the Act. In pursuance to the show cause notice issued by this court, counter-affidavit was filed on behalf of the respondents by the Extra Assistant Commissioner, Government of Assam. In the said counter-affidavit, it was alleged that in the instant case, the appellant-company had purchased petroleum products from the BRPL and sold the same through its various dealers to the consumers and had also collected sales tax from the consumers on the entire sales. The entire collection of sales tax was done as per the provisions of the Act. However, instead of depositing the entire collected sales tax with the State Government, the appellant had misappropriated it and contrary to the statutory provisions had not deposited the sales tax with the State Government. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d paid sales tax on purchase of petroleum products from the BRPL. In that event, according to the Scheme of the Act, the sales tax would be leviable only on the difference of the resale price and purchase price since under sub-section (1) of section 8 of the Act, tax is levied at the first point sale. The appellant-company had purchased goods from the BRPL and admittedly paid sales tax on the said purchase. According to the clear construction of the provisions of the Act, the appellant was now under an obligation to pay sales tax only on the difference amount between purchase price and the entire sale price. Directing the appellant- company to pay sales tax on the entire amount resold would amount to double taxation. In the counter-affidavit, it was clearly alleged that the appellant- company had collected sales tax from the consumers through various dealers on the entire resale price. However, instead of appellant-company depositing the entire collected sales tax with the respondent-State Government had misappropriated it. According to the respondents it was a clear case of unjust enrichment and the appellant-company cannot retain the excess amount collected by it. In the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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